Deripaska forecasts construction boom in Russia in next 20 years

There will be a construction boom in Russia in the next 20 years due to the necessity of modernizing infrastructure, Basic Element (BasEl) chief Oleg Deripaska forecast.

There will be a construction boom in Russia in the next 20 years due to the necessity of modernizing infrastructure, Basic Element (BasEl) chief Oleg Deripaska forecast.

"The country needs fundamental infrastructural changes, which we will create in the next 20 years: railroads, bridges, junctions, logistics points, airports," he told journalists.

Russia's current situation in construction materials production needs to be changed. To this end, BasEl has started implementing several projects - the construction of cement factories and construction materials production facilities, Deripaska said.

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There will also be a rise in housing construction over the next decades, he said.

"I am very pleased with our participation in the construction industry. I think that it will be highly profitable in the future. If you look from the perspective of residential occupation, we have 96%, whereas in other countries it is 60%-65%, depending on the country. At the same time, if we evaluate the current provision of square meters to the population, Russia awaits 20 years of a construction boom," Deripaska said.

A lack of transparency in the construction business and high interest rates are holding back the development of the industry, he said.

"In our country, yield and timeframes for reaching design capacity are very important, which is why we are expending every effort to make sure that our projects begin to pay themselves back from the first or second year. The cost of capital is too high in this country," Deripaska said.

BasEl's construction sector, the parent company of which is Glavstroy, manages four divisions: housing and civil construction, construction materials production and civil and industrial facility design (Glavmosstroy Corporation (RTS: GMST)); development (Glavstroy Development); infrastructure construction (Transstroy); and cement production (BasElCement).